Traders express reservations over CPEC

LAHORE – The business community has urged the government to announce a ‘domestic business plan’ along the route of the China Pakistan Economic Corridor (CPEC) in consultation with the concerned industrial associations to take care of local industry so that domestic investor can reap maximum benefit of this mega project.

Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Central Chairman Ijaz Khokhar suggested to set up a CPEC Business Committee or a CPEC Business Wing to update the local industry about the nature of China’s planned industrial units in the country, warning of its adverse effect on local industry and apprehending that such a scenario might turn Pakistan into a purely consumer market.

He said that domestic industries are already at risk of being wiped out due to dumping of cheap Chinese products. “We appreciate the government efforts for CPEC which has opened opportunities for industrial cooperation between the two friendly countries. However, it is our opinion that CPEC committee or CPEC Business Wing should be established to safeguard the existing local industry as well as international investors.”

Ijaz said that CPEC cost and benefit ratio should also be shared with local industrial associations. The government should also announce the same incentives and tax relaxations for every industrial unit across the country as it has declared for Chinese investors in CEPEC, to give level-playing field.

He said that presently the China has created non-tariff barriers for Pakistani investors through strict visa policy. Pakistani embassy is issuing long-term, multiple visas to Chinese businessmen without involving any ministry on its discretion. On the other hand, China issues visas to Pakistani businessmen for a single entry of shortest term, he lamented. “How we can market our product in China in this way,” he questioned. “China is such a big country, which needs at least one-month visit visa for marketing of our products,” he added. He said that China Embassy demands long list of documents, even not required for frequent business traveler and holder of multiple visa of EU, having long travel history. “This is major non-tariff barrier imposed by China. We cannot buy any property in China but they have purchased the whole Gwader and a large area near Express Highway in Karachi,” he stated.

Instead of giving freehand to the Chinese businessmen, the Pakistan government should devise some rules, convincing them to forge joint ventures with local companies on 49-51 ratio, he proposed.

He asked Prime Minister Nawaz Sharif to announce the incentives package for exporter without any further delay, appealing him to accept responsibility for controlling the freefall of textile exports. The government should honour its pledge to clear pending tax refunds of exporters, without any delay, he added.

The PRGMEA chief said that the prime minister should take the ownership of improving exports and announce textile package. “Incentives will not be affective until the prime minister takes ownership of exports till the next general elections as policy implementation is not seen anywhere,” he added.

On the other hand, value-added textiles exporters urged the government to introduce a soft import policy to help manufacturers diversify apparel products to augment their businesses and export. “The country has merely few textile products to offer in world markets at present, whereas Bangladesh and China offer over 100 product lines to global buyers,” they added.

Lahore Chamber of Commerce and Industry (LCCI) former vice president Kashif Anwar said that CPEC is obviously going to help Pakistan by creating millions of new jobs. However, Chinese exporters were enjoying zero duties on 35% of total product lines at present. In comparison, China has offered to immediately slash duties to 70% of product lines. Both sides are negotiating the FTA afresh after Pakistani industries complained about the 2006 agreement that was highly in favour of China.

Anwar said that none of the major trade agreements, Pakistan has signed, have shown a significant increase in its exports. However, imports have shown a healthy increase post-all major FTAs signed by Pakistan. Pakistan had a trade deficit with China, Malaysia and Indonesia when it signed FTAs with them in 2006, 2008 and 2013, respectively. Its trade balance was still in negative with these countries.

Meanwhile, APBF president Ibrahim Qureshi said that CPEC is not for Pakistan rather it seems to be ‘through Pakistan.’ He alleged that presently B-to-B investment under CPEC is very rare and all major investments are G-to-G, raising question of transparency and standard. He said, “Chinese companies are utilising their own human resource as we have no trained human resource.”

Qureshi said that no PEPRA rules are followed in government-to-government investment ventures while contract is awarded without any bidding, he added.

GCCI former president and REAP ex-vice chairman Samee Ullah Ch urged the federal government to take the business community on board on the nature of China’s proposed industrial zones in the country, apprehending that such a scenario might weaken its own manufacturing sector. He regretted the government had not taken the chambers in confidence over the issue.

He said the local manufacturers’ concerns over the CPEC’s negative effects on the local industry should be addressed apprehending that such a situation might hit local exports. He emphasized that the government should be very careful in moving on CPEC to avoid the situation emerged from signing Free Trade Agreement (FTA) with China. He said the business community’s main concern about CPEC was transparency in CPEC projects.

FPCCI former president Rauf Alam was concerned about the protection of the local industry, which would have to compete Chinese products to be directly supplied to Pakistani market or to be produced in industrialists units at Special Economic Zones (SEZs) enjoying better facilities and many incentives including tax holiday against the existing ones facing various problems mainly the high cost of doing business. “Existing industries be placed at par with those at SEZs,” he asserted.

He called for handing over the administration of SEZs to renowned private sector people through main trade bodies of the country as they would be giving better results along with promoting sense of ownership among local business community in CPEC related projects.

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